The Curious Case of the One-rupee Coin: Why India Still Values Its Lowest Denomination Despite Rising Production Costs

The Re 1 coin, a staple of India's currency for decades, is far from obsolete. Whether stuck on a 'shagun ka lifafa' (gift envelope) or exchanged for a chewing gum or mouth freshener, the little coin still packs a punch.

"Watch the pennies and the dollars will take care of themselves," one of the US' founders, Benjamin Franklin, once said. Centuries later, US president Donald Trump did just that. Trump directed the Treasury Department to stop minting new pennies, citing the rising cost of producing the one-cent coin. Trump's move to junk the penny, the coin that denotes a hundredth part of a dollar, came as part of his efforts to reduce what he perceives as wasteful spending. Even as the US is on the verge of doing away with the penny, the lowest denomination in the US currency, how does the one-rupee coin -- which is worth more than what it bears as a mark -- hold up in India?

The Re 1 coin, a staple of India's currency for decades, is far from obsolete. Whether stuck on a 'shagun ka lifafa' (gift envelope) or exchanged for a chewing gum or mouth freshener, the little coin still packs a punch.

Even as digital payments have seen an uptick in India, the Re 1 coin refuses to be sidelined. After all, even the 50 paise coin is still in circulation legally.

Technically, a penny, which represents one cent in the US, is not equivalent to an Indian rupee. The Indian rupee is a standalone unit, comprising 100 paise, just as a US dollar consists of 100 cents.

WHY TRUMP CALLED FOR JUNKING THE PENNY

Trump has noted that producing pennies costs more than their face value, with each penny costing over two cents to make.

"For far too long the United States has minted pennies which literally cost us more than 2 cents. This is so wasteful!" Trump posted on Truth Social.

Trump's decision follows criticism from various quarters, including Elon Musk's Department of Government Efficiency (DOGE), which he said has put a significant financial burden of penny production on US taxpayers.

Trump hadn't mentioned his plan of scrapping the penny during his campaign.

The cent has been in circulation in the US for over 230 years now.

In India, the Reserve Bank of India (RBI) and the Union Finance Ministry have historically managed to keep the cost of producing coins relatively low by using cost-effective materials and efficient production processes.

COST OF MINTING RE 1 COIN IN INDIA

India's one-rupee coin is minted by the Security Printing and Minting Corporation of India Limited (SPMCIL), which operates under the Department of Economic Affairs of the Finance Ministry.

While recent production costs for the one-rupee coin are not publicly available, an RTI filed by India Today in 2018 revealed that manufacturing a single one-rupee coin costs more than its face value.

Responding to the RTI query, the RBI revealed that the average cost of manufacturing a one rupee coin is 11 paise more than its own undersigned value.

Moreover, the RBI's new series of coins with the 'Rupee Symbol', carried on with the minting of the 3.79 gram Re 1 coins made of ferritic stainless steel, along with that of 2.83 gram 50 paise.

This means that in 2018, a Re 1 coin cost the RBI Rs 1.11 to mint, a figure that might have risen by 2025.

Unlike the one-rupee coin, its paper counterpart was discontinued in 1994 due to high printing costs, but made a comeback in 2017.

An interesting anecdote here is, unlike India's currency notes, which bear the RBI Governor's signature, Re 1 notes and coins are issued by the Central Government. Hence, the Re 1 notes have the signature of the Union Finance Secretary.

However, the RTI reply in 2018 revealed a sharp decline in one-rupee coin production, dropping from 903 million to 630 million that year.

With India continuing with the Re 1 coin, the RBI and the government have ensured that it remains in circulation to enable small transactions and maintain financial inclusion.

The circulation of the one-rupee coin is also significant, as it is widely used in everyday transactions, especially in rural areas where access to digital payment systems may be limited.

Despite rising production costs exceeding the face value, the Re 1 coin remains an integral to both daily transactions and traditions. Given its role in festivities and as a symbol of good luck, the buck isn't going to stop anytime soon